The price to win a title? $286M

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As Formula One gears up for the Malaysian Grand Prix this weekend, teams are trying to come to grips with their 2013 cars and extract the most they can from it’s performance. Those cars are expensive to make and while the payout for winning a championship is large, Red Bull spent $286.5m on their 2012 program according to our friend Christian Sylt.

Team budgets have become a hot topic of late while Marussia, Caterham, Sauber, Force India and even Lotus are seeking potential investors and sponsors to prop up their racing programs. The need for cash is being exacerbated by the changing regulations and engine format in 2014 and while large teams may have the resources to manage it, the smaller teams are less equipped to spend $280m on a racing program.

As Sylt points out, Force India, Sauber, Caterham and Marussia are all open to ownership or new sponsor deals. Even McLaren’s long-standing sponsor partner Vodafone is bowing out after the 2013 season. The costs are inching ever higher with Red Bull spending 11% more in 2012 than the previous year on their program. While others move cash, sponsors and investors in and out, Mercedes even unloaded 40% of their program to Tot Wolff who came from an investor position at Williams F1.

While sponsors are leaving, paying drivers have become the norm for the smaller teams. It’s a mixed bag of finding money to continue racing and those teams that are centered on simply competing in Formula One with no other source of revenue, such as energy drinks, road cars or hybrid technology as well as electronic systems, face a steep challenge of continuing in a sport with escalating costs and top teams who get the lion’s share of the prize money.

It will be interesting to see what financial arrangement the smaller teams can make to remain in the sport but perhaps the bigger question is how can they remain competitive with top teams. Innovative design is always a possibility and this year, Lotus F1 seem to have fielded a competitive car on far less investment than Red Bull, Ferrari or McLaren.

 

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